Goldman Sachs figured out what parents have known for years: Netflix’s future lies with kids

Goldman Sachs has released data that confirms what thousands of parents already know: Netflix’s future lies in the hands of children. According to a report from Bloomberg, Netflix is set to see some pretty intense profit growth over the next few years as a result of the various moves its making now: snatching up licensing agreements for animated content left and right, expanding to Australia and six European countries, and tacking on an extra dollar to its prized streaming service for new subscribers. But it seems that children’s content might currently be the service’s most underutilized sector – because Netflix has quietly set it itself up to become the central hub for every child’s streaming needs, it will probably equal big bucks if and when the niche market explodes.

Goldman analyst Heath Terry notes in the report that only 3 percent of Netflix’s user base consists of children. Even a 5 or 10-percent upward swing could yield massive profits.

Kids have more access to mobile devices and the Internet than ever before (even just a couple years ago) and, as the team behind Goldman’s report notes, this phenomenon is opening up online video-streaming to more and more children: “Kids aged 0-8 in the U.S. are increasingly gaining access to mobile devices, as 75 percent of kids now have access … compared to 52 percent just two years ago, according to Common Sense Media. Interestingly, 7 percent of kids already have their own tablets, and to put this into perspective, only 8 percent of adults had their own tablets just two years ago.”

At the center of Goldman’s report is the firm’s upgrading of Netflix stock from neutral to buy – Terry raised the stock’s price target from to $590 from $380, marking a 34-percent premium over the stock’s $440 close on Monday, according to coverage by Forbes.